The Charity Commission for England and Wales has secured £1 million of funds for charities following its inquiry into a grant-making charity.
The unnamed grantmaker was the subject of an inquiry which began in February 2017. Newly appointed solicitors for the charity had sought the current and former trustees’ relief from liability for unauthorised payments totalling approximately £650,000 to three trustees who were acting as consultants for the charity’s wholly owned subsidiary limited company. They also sought permission to sell 99% of its shares in the subsidiary limited company.
The Commission’s inquiry examined the administration, governance and management of the charity, specifically regarding decision making and conflicts of interest.
The inquiry report, published today, reveals that the payments were found to have amounted to “significant private advantage and financial benefit”, as well as a direct breach of the charity’s governing document and the trustees’ legal duties.
Although the inquiry accepted that ‘honest mistakes’ had been made, the trustees agreed to seek recovery of the £650,000 and adopt a formal conflicts of interest policy.
The trustees took independent advice on the sale of the limited company, and satisfied the Commission’s inquiry. The Commission therefore granted consent under s105 and s201 of the Charities Act to authorise the transaction, resulting in a further £350,000 going to the charity.
Harvey Grenville, Head of Investigations and Enforcement at the Charity Commission said: “Our intervention has allowed this charity to claw back a significant amount of money that can now go to charitable causes. I hope this will encourage other charities to be mindful of their duties and consult our guidance when making important decisions.”
Why not name the charity?
Normally the Charity Commission publishes the full details of its statutory inquiries. In this case however it accepted submissions from the charity involved which said that its identification in the inquiry report would be severely detrimental to the charity and its beneficiaries.
Consequently the Commission published its findings without identifying the charity, so that lessons could yet be learned by other charities.
The Commission’s full report of its inquiry is available on GOV.UK.